Earlier this month I attended the Schneider Electric “Leadership Forum” – an annual get-together where the company’s strategy is shared, discussed and then disseminated. It’s not unusual for these events to include a presentation from the leader of a public company currently enjoying the limelight. Whatever the story, the idea is that we take on board the example to be drawn from such success and build it into our working lives at Schneider Electric. As a 177 year-old company which has transformed itself over the last 30 years through acquisition and innovation, there are always important lessons to be learned from these sessions.
So it was somewhat offbeat that this year our leader, Jean-Pascal Tricoire, took to the stage to with Jorma Ollila to discuss the decline of Nokia. Ollila stepped down as Chairman of the board of Nokia in May 2012 having joined the business in 1985. Under his direction, Nokia had enjoyed unprecedented success. According to the Financial Times “Ollila took Nokia from a struggling Finnish industrial group with a market capitalisation of €650m to become the world’s largest phonemaker with an equity value of close to €300bn in the space of a decade after he took over as chief executive in 1992.”
In a frank and open interview in which he didn’t pull any punches, Ollila told our CEO of how in 2007, he realized that Nokia were going to lose the battle for domination of the foundling smartphone market. From his comments, the challenge lay in the company’s position of strength – it had R&D resources to apply, market intelligence, a brand trusted for innovation and reliability. It had identified the need for change, but in the end, it couldn’t find the will to change. Despite everything they knew, they could not get the Nokia juggernaut to alter direction. The problem was in the company’s culture; the primacy of consensus made it impossible for Nokia to be agile and responsive to change.
Hearing Jorma Ollila talk, I realized that this isn’t just a lesson for Schneider Electric, it’s a lesson for all those businesses that depend upon data centers or data center services for their success.
The advent of DCIM software has presented the opportunity to fully align IT and facilities – something the industry has been talking about for a decade. I’m sure by now everyone knows the arguments for “bridging the gap”, and that companies that have already made this alignment tend to have the highest efficiency data centers. So it came as quite a surprise to me to learn that only around a fifth of companies are forming teams with the two disciplines converged. What came to mind was that quote attributed to Peter Drucker and made famous by Mark Fields, president of Ford Motor Company: “culture eats strategy for breakfast.”
Taking on board what Nokia teaches, company culture has to transform, or at least be open to new possibilities when it comes to data center operations. Dependence upon out-dated approaches and facilities will seriously (if not terminally) hamper the ability to compete in rapidly evolving markets. Setting aside any issues related to energy waste or carbon emissions, getting your cost base right and infrastructure which is flexible to IT demand is key to maximizing data center ROI. This requires teams which can pull together in the right direction. With data centers becoming increasingly large, complex and critical, DCIM software provides tools which can be used throughout organisations to provide checks and balances to ensure reliable compute capacity at an economic cost.
The lesson from Nokia is the lesson of natural selection: adapt or die. The only constant in business, as in life, is change. In business, you can’t afford to be a bystander, as Drucker also said, you need to create the future. But as importantly, you need to be prepared to change if you want different or better outcomes – in the data center it’s certainly true that if you keep on doing what you’re doing, you’ll keep getting the same result. Or as Drucker warned, “In times of turmoil, the danger lies not in the turmoil, but in facing it with yesterday’s logic.”
10 years ago
Soeren I definitely agree with you a change in culture can be a major challenge in the Data Center battle, specially in Latin America, where changes are very difficult to implement.